Social functioning deficits have long been a defining feature in the illness of schizophrenia. In addition, research suggests that perception of emotion in others as well as understanding and acting on social cues (forms of social cognition) are impaired in schizophrenia. In contrast, research on emotional processing (i.e., self-reported experience, autonomic indicators, brain activation) in schizophrenia has been mixed, with evidence for both impaired and intact processing. No study has yet examined how social cognition and emotional processing might interact together to influence social functioning in schizophrenia. The present proposed research aims to examine and expand upon our current knowledge of the relationship between social cognition and emotional processing in schizophrenia and how each of these components relates to social function in schizophrenia. Participants will be 45 outpatients with DSM-IV schizophrenia and 45 healthy controls that are participating in a larger study of emotional regulation in schizophrenia. Each participant will be administered measures of emotional processing (self-reports of valence to affective stimuli while brain function is measured using fMRI), social cognition (affect recognition and social inference), and social function (self-reports of social, educational and occupational function). [unreadable] [unreadable] [unreadable]